Estimate the cost of closing your CD before it matures, and whether a better rate makes it worth it.
Banks charge a penalty if you withdraw money from a certificate of deposit (CD) before the end of the term, usually a set number of months of interest. Use this tool to see how much interest you forfeit, what you would walk away with, whether the penalty cuts into your original principal, and whether moving the money to a new CD at a higher rate recovers the penalty before your original maturity date. If you would rather avoid penalties altogether, a CD ladder staggers maturity dates so you have regular access to your money.
Use your state's average CD rates
Loads the MonitorBankRates average CD APY for your state for the term you select, and uses it for the new rate in the break even test.
Withdrawal Penalty Estimator
Enter your CD details. Results update as you type.
Principal, interest, penalty and payout
Enter the APY you could get on a new CD for the time left on this one. The calculator compares staying put with paying the penalty and reinvesting.
What Breaking a CD Costs at Today's Average Rates
As of September 21, 2026, the MonitorBankRates national average APY on a 60 month CD is 2.79%. A $10,000 five year CD at that rate, broken after 12 months with a 12 month interest penalty, has accrued about $279.10 in interest and owes a penalty of $279.10, for a net payout of $10,000.00, so the principal is intact but the first year earned nothing. Left alone to maturity, the same CD would earn $1,475.60 over five years. For a 12 month CD at today's 2.87% average, a typical 3 month penalty costs $71.68 on $10,000.
| $10,000 five year CD at 2.79% APY, broken after 12 months | Amount |
|---|---|
| Interest accrued in 12 months | $279.10 |
| Penalty (12 months of simple interest) | $279.10 |
| Net payout | $10,000.00 |
| Effective annualized return | 0.00% |
| Interest if held to maturity (60 months) | $1,475.60 |
Averages are recalculated every day from the CD rates banks and credit unions publish. Your bank's penalty terms are in your deposit agreement and may differ from the typical values used here.
How Early Withdrawal Penalties Work
When you open a CD you commit to keeping the money in the account for a set term. In exchange the bank pays a fixed rate that is usually higher than a savings account at the same institution. Breaking the term early triggers a penalty, which most banks calculate as a set number of months of simple interest on the amount withdrawn, at the CD's rate, whether or not you have actually earned that much interest yet.
Important Considerations
How to Use the Penalty Calculator
-
Enter your CD principal and term
Type in the original deposit, the dollar value you put into the CD when you opened it, and pick the term. The term fills in today's average APY and a typical penalty for that term.
-
Enter the CD's APY
Replace the average with the rate you locked in at opening, which is on your CD agreement or statement. The penalty is calculated from this rate.
-
Enter how many months you have held the CD
Count from the day the CD was opened to today. If you have held a 24 month CD for 8 months, enter 8. Months left on the CD are filled in for you.
-
Check the penalty against your agreement
Find the early withdrawal penalty in your CD agreement, usually expressed as a number of days or months of interest. Common values are 90 days (3 months) for short CDs and up to 365 days (12 months) for 5 year CDs. If your bank charges a percentage of principal instead, switch the penalty basis.
-
Test the break even
Enter the APY you could get on a new CD today. The calculator shows whether the higher rate recovers the penalty before your original maturity date and how many months that takes.
Frequently Asked Questions
Is the penalty always based on interest?
Usually. Most early withdrawal penalties are expressed as a specific number of days or months of simple interest at the CD's rate. A 6 month penalty on a 4% APY CD is about 2% of the amount withdrawn. A few banks charge a flat percentage of principal instead, which the penalty basis option covers.
Can I avoid CD penalties?
You can avoid penalties by waiting until the CD matures or by choosing a no penalty CD, which allows early withdrawal without a fee, though these typically pay lower APYs. Building a CD ladder is another approach: staggered maturity dates give you access to a portion of your money each year without breaking any single CD.
Can the penalty eat into my principal?
Yes. If you withdraw before you have earned more interest than the penalty amount, the bank takes the difference from your principal. For example, withdrawing from a 5 year CD with a 12 month penalty after only 2 months means you lose more than you have earned, and the bank deducts the shortfall from your original deposit.
Are penalties tax deductible?
Yes. Early withdrawal penalties on CDs are deductible as an adjustment to gross income on your federal tax return. The bank reports the penalty on the interest statement it sends you each January and you claim it on Schedule 1. That means the penalty costs less after taxes than the dollar figure suggests; you recover roughly 22% to 32% of it depending on your tax bracket.
When does breaking a CD actually make sense?
It can make sense in three situations: (1) you have an emergency and the CD money is your only option, (2) rates have risen enough that a new CD covers the penalty before your original maturity date, which the break even section above tests with today's average rates, or (3) you find an investment that meaningfully outperforms the CD over its remaining term. Run the numbers first: a penalty of a few hundred dollars can take years to recover if the rate gap is small.
Do all banks have the same CD penalty structure?
No, penalties vary widely by institution. Some banks charge a flat 90 days of interest regardless of term length; others scale up with term (90 days for 1 year CDs, 6 months for 3 year CDs, 12 months for 5 year CDs). A few use a percentage of principal instead of months of interest. Always check the deposit agreement before opening a CD; the penalty structure should be in writing.
What is the difference between a no penalty CD and a regular CD?
A no penalty CD lets you withdraw the full balance after a short waiting period (often 7 days after opening) without any penalty. The trade off is that no penalty CDs typically pay 0.25% to 0.75% lower APY than regular CDs of the same term. They fit when you want CD style rates but think you might need the money before maturity. If you definitely will not need access, a regular CD pays more.
